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Tel. +44 (0)20 7287 4414
Email. info@brugesgroup.com
The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.
The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

Fundamental issues and the financial need for a clean Brexit

Fundamental issues and Post-Brexit vision

The United Kingdom is at a crossroad, one which will define its future for generations to come. Parliamentarian Brexiteers are playing a pivotal role in bringing about this change of paradigm by making sure the United Kingdom leaves the European Union.Brexiteers' avant-garde mindsets make them the architects of this new paradigm, which will make the current economic system obsolete.

With that in mind and with such a historic opportunity for the country, one wonders why the government would need to cosy up to big businesses.Understanding the underlying factors of how Brexit was derailed will enable us to put us right back on track.

Foundation diagnosis – focusing on the underlying issues

Why wonder whether Tory Brexiteers are idiots? Probably because in his mind, they have failed to realise that the so-called negotiations have all along been a trap designed to make ministers run like headless chickens for a deal that will never be about leaving but rather about staying - in the customs union - thus continuing to erode trust in our institutions and damage the relationship between elected representatives and the electorate.

There is nothing to negotiate with the European Union!

Former Greek Finance Minister Yanis Varoufakis states the EU never listens. He sat opposite technocrats from Brussels in 2015 when negotiating Greek debt.

"My team and I worked hard to put forward proposals based on serious econometric work and sound economic analysis. Once these had been tested on some of the highest authorities in their fields, from Wall Street and the City to top-notch academics, I would take them to Greece's creditors in Brussels, Berlin and Frankfurt. Then I would sit back and observe a symphony of blank stares. It was as if I had not spoken: As if there was no document in front of them. It would be evident from their body language that they denied the very existence of the pieces of paper I had placed before them. Their responses, when they came, would be perfectly independent of anything I had said. I might as well have been singing the Swedish national anthem. It would have made no difference."

European technocrats focus their energy on information overload publishing; broadcasting endless stories to make their opponents believe they have more to lose than themselves. This then leads to their opponent making unnecessary concessions based on everything but facts, such as the 'divorce bill' even though this is not a marriage, or the protection of European citizenry even when the EU has not batted an eyelid about what is happening in France.

Negotiations eventually reach a 'stagnation point' where no progress can be made and the country pursuing an agreement with the superstructure ends up with the worst possible deal, which politicians will argue over leading to further political splits. Cabinet ministers' resignations have become the new normal since Theresa May took over the Tory party leadership.In any other context, she would have been forced out, yet she lingers – keeping, as it were, the title of Prime Minister in Name Only. Theresa May's focus on negotiations is what is keeping Britain in a state of virtual ambush.

The way out of this trap is to project a vision of what post-Brexit future will look like.

Time has come to present a post-Brexit vision in Parliament confidently positing we will be leaving the European Union. The word negotiations should no longer be mentioned, instead all focus should be on creating cross-party goodwill of parliamentarians who together will shape the future of the United Kingdom.

A competitive advantage

"'Project After' looks at options from export support to cutting taxes and tariffs," designed to boost the economy in the event the UK resorts to World Trade Organisation terms. This is not the first time in our history we have had to reinvent ourselves. The City has emerged under Margaret Thatcher to become the leading financial place in the world.

Cutting taxes and tariffs, transforming the United Kingdom as well as regaining the power to make its own laws will make the United Kingdom geographically and economically competitive.

The United Kingdom will enter into direct fiscal competition with the likes of Ireland and Luxembourg - taking capital away from the European Union. Furthermore, the United Kingdom has an advantage over these countries since it retained its own currency unlike these countries which are subject to the European Central Bank.

The UK's exit from the European Union will create a competitive environment in which big businesses will struggle to thrive. Our exit from the European Union will create a level playing field for small and medium businesses who will have the opportunity to challenge more established entities. It is important to realise that large businesses would stop at nothing to protect their interest even if it means taking 'no deal off the table' as is repeated in the conference calls between government ministers and business leaders. In his article, Nelson suggests "companies with high costs and overheads tend to like regulation being erected by the EU, creating barriers to entry for new companies. The multinationals can afford lobbyists to make sure rules in Brussels work for them. It's part of a trend that has seen big firms concentrate power – and their sway over governments."

Large companies have attempted to fend off competition from smaller businesses by investing in them or buying them out to get control or branch out to other sectors to keep making profit. The UK's departure from the EU will 'sex up' business conditions perhaps leading to the emergence of new powerhouses and this is what these large businesses are most afraid of.

A distorted economy

The relationship between governments and business leaders became significant during the 2008 financial crisis when the former used public funds to bail out institutions deemed 'too big to fail'.

Flooding the market with money whilst bringing interest rates down to near negative levels in some cases has distorted the economy and affected the way businesses conduct themselves. Quantitative Easing has killed growth while failing to control inflation and create real value for the economy. The ECB's policy focuses on price increases and low interest rates whilst the UK ascendant phase will be characterized by a decrease in prices and high interest rates avoiding the economic stagnation that will plague the block. The ECB's artificial growth stage has modified attitudes towards work in society at large, creating inefficiencies.

Here is the perfect example of someone who fears reality. BlackRock's multi-asset strategist is not the only one to present a rather distorted view about the health of the EU's economy. BlackRock's Portfolio Manager Rupert Harrison retweeted this tweet below painting a rosy picture of European economy except for Italy, which has entered a technical recession in the last quarter of 2018.

In order to continue functioning, companies have relied on debt, leading to the rise of 'zombie companies.' Businesses that should be dead linger on damaging the economy further.

We must not allow all presumed experts to shape the debate because many alter perceptions by manipulating facts to create an alternative economic reality.

It is worth bearing in mind there are very few experts who are truly disinterested. The majority will hide their ulterior motives (whatever they are economic, ideological or driven by power and hegemony) behind their professional profiles.

The Block's unity is an illusion

While some businesses engage in subversion to keep the UK in the European Union, there are others who seek naturally to protect their interests.

An article published in Hannover Economic Papers has presented scenarios in which Germany and/or Italy would leave the European Union.

The graph below sums-up our negotiating hand in Europe (not the European Union)!

Besides Italy and Germany, there are countries/industries dependent on the United Kingdom market. These include Holland, Ireland or French farmers just to name a few. They are bound to explore bilateral deals as the European economy takes a dip. There will come a time when the European Union will have nothing to say about negotiations as dissenting interest will take precedent over the survival of an ideological superstructure threatening to bankrupt them at an economic and political level.

EU's idiosyncrasies

The EU's own idiosyncrasies have led to the emergence of Germany as the largest economy in Europe relying on the Euro (weaker than what a Deutsche Mark would have been) to boost its exports.

Southern European countries such as Spain, Greece and Italy as well as France, tied to the euro, have been the biggest losers - with their unsolvable debt-ridden economy.

Ireland's corporate tax rates (12.5%) have enabled the country to attract large tech companies looking to set up home on the continent. This could soon end if the European Commission removes Ireland's ability to set its own corporate tax rate.

French president Emmanuel Macron may have claimed that "Europe [was] not a supermarket" but its country is the first one to bend the rules when it comes to the euro budget rules. Italy may be bound by rules, but, apparently, these should not apply to France according to French-born Isabelle Mateos Y Lago.

The United Kingdom remains the 'clearing house' of the eurozone overseeing exchanges for countries who have adopted the single currency.

The UK's departure from the European Union on WTO terms is already shattering the presumed unity of the block.

Brexit cannot be allowed to fail as it is absolutely and uncompromisingly earnest.

Brexit threatens the very existence of the European Union, so we must remain extremely vigilant now and not underestimate the danger posed by the situation or by the people we are dealing with.

Dull but desperate days
EU directives and the expression of opinion
 

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Monday, 27 May 2019
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